PETALING JAYA: Sime Darby Bhd
is expected to see improving earnings momentum over the coming quarters, underpinned by stronger generator deliveries to data centre projects, resilient demand from its automotive operations and a gradual recovery in the industrial segment.
Analysts remained constructive on the group’s medium-term prospects, although they flagged near-term risks from geopolitical tensions, cautious mining customers and softer consumer sentiment.
TA Research said Sime Darby’s management had highlighted that geopolitical tensions have increased fuel and operating costs, creating some caution among consumers and industrial customers.
Nevertheless, the group said the supply chain ecosystem remains stable and no major disruption has been observed to date, as noted by TA Research.
“Mining customers remained cautious and continued to defer maintenance activities, weighing on industrial performance,” the research house said.
Nevertheless, it observed that orders have started returning, with Sime Darby expecting “a gradual recovery ahead”.
TA Research also pointed to potential opportunities arising from new completely built-up electric vehicle requirements, saying Sime Darby had highlighted its close relationship with BYD and remains open to exploring potential opportunities.
TA Research revised its target price to RM2.16 from RM2.10 after rolling forward its sum-of-parts valuation base to calendar year 2027.
However, it upgraded its recommendation for the stock to “hold” from “sell”.
“While near-term earnings visibility remains mixed amid softer industrial conditions and ongoing macro uncertainties, Sime Darby’s share price has corrected by approximately 13% over the past three months, improving its risk-reward profile,” it explained.
Hong Leong Investment Bank Research maintained its “buy” call on Sime Darby, with an unchanged target price of RM2.85, saying the group would “continue to leverage on the performance from industrial and UMW, while China Motor appears to have bottomed”.
It added that demand for power systems had surged alongside data centre developments across Malaysia, Singapore and China, while the construction sector remained resilient in Malaysia and Singapore.
RHB Research kept its “buy” recommendation but lowered its target price to RM2.27 from RM2.55, citing weaker industrial growth assumptions and concerns over potential exclusion from the FTSE Bursa Malaysia KLCI Index.
Still, it said “fundamentals remain intact and any weakness could present accumulation opportunity”.
“We expect a relatively stronger quarter ahead, supported by seasonally higher car sales, although the industrial segment should be flattish,” RHB Research said.
Kenanga Research reiterated its “outperform” call with a target price of RM2.75, expecting the group to receive extra income boost from automotive principals in the fourth quarter of its financial year ending June 30, 2026 (4Q26), with the industrials segment to ride on higher delivery of generators to data centres in Malaysia.
“We like Sime Darby for its unique position as being the automotive leader in Malaysia and electric vehicle leader in Singapore, Thailand and the Philippines while balancing out cyclical demand in other regions, and the strong sales and margin at its industrials segment acting as a proxy to the Australian mining sector.
“It also offers an attractive dividend yield of 6%.
“We expect significant investments by its industrial clients for the next five years, translating into a potential industrials segment double-digit growth for both sales and margin,” it explained.
Sime Darby’s 3Q26 net profit rose to RM654mil from RM193mil in 3Q25, while revenue eased to RM15.75bil from RM16.31bil.
For the nine-month period, net profit increased to RM1.44bil from RM1.3bil, with revenue edging up to RM52.76bil from RM52.3bil previously.
While near-term headwinds persist across several segments, Sime Darby’s diversified earnings base and improving industrial order flows should provide support to its recovery trajectory over the coming quarters, one analyst told StarBiz.
“We believe the group remains well-positioned to benefit from sustained infrastructure and automotive demand across its core markets, particularly as data centre-related investments continue to gain traction in the region,” said the analyst.
